Standard Chartered to pay $670m to settle Iran sanctions allegation

The Guardian: Standard Chartered warned on Thursday that it expects to pay a total of $670m (£415m) to US regulators to settle allegations that it breached sanctions with Iran.
The Guardian

New York's Department of Financial Services claims transactions left system susceptible to terrorists

Standard Chartered warned on Thursday that it expects to pay a total of $670m (£415m) to US regulators to settle allegations that it breached sanctions with Iran.

In a trading update, the bank admitted it expected to pay another $330m on top of the $340m paid to New York's Department of Financial Services for scheming to hide billions of pounds of transactions – some $250bn – from the authorities over a decade. The DFS claimed this left the financial system suspectible to "terrorists" and "drug kingpins" although the bank insisted it had not breached sanctions to the extend claimed by the regulators.

The bank, led by Peter Sands, admitted that pre-tax profits were being knocked by the regulatory fines. "Profit before tax for the group is expected to grow at a mid single digit rate. Excluding the NY DFS settlement profit before tax is expected to be up by a double digit percentage," the bank, a familiar presence on high streets across Asia and Africa, said.

Until the allegations the bank was regarded as having a reputation untarnished by the financial crisis but had settled with the DFS in August after the regulator made allegations that one its top bankers had exclaimed "you fucking Americans" when warned of the potential breaches of US sanctions against Iran.

"The group remains in active and constructive discussions with the other US agencies on the resolution of the group's historical US sanctions compliance. We anticipate that these discussions will conclude very shortly and are likely to result in the group paying a sum of approximately US$330m," the bank said. The other authorities include the US Treasury, the Federal Reserve and the New York Justice Department.

Sands had been forced to cut short his summer holiday to fly to New York to negotiate a settlement with the DFS at a time when the UK's banks were suffering other embarrassments. Barclays had just been fined £290m for manipulating Libor while HSBC had been accused of laundering money through the US for drug barons in Mexico and has since admitted the penalties for these alleged offences could reach $940m.

Sands tried to focus on the trading update ahead of its full year results in February. "Standard Chartered is on course to deliver another strong set of full year results for 2012. We continue to focus on the basics of banking, on maintaining a very strong and conservatively positioned balance sheet, and on the disciplined execution of our strategy. We continue to see significant opportunities across our markets in Asia, Africa and the Middle East," he said.

The bank, unlike its rivals, is hiring and expects to employ an extra 1,800 by the end of the year than last year.

A swath of fines against other banks are expected as the regulators continue to investigate Libor.


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